LONDON Nov 30 Cyprus's financial regulator
CySEC issued a warning to the mass of retail currency brokers
registered on the island on Wednesday over their use of bonus
schemes to encourage trading in risky products and related poor
treatment of clients.
The circular, referring to an 80-page guide for regulators
and other sector stakeholders issued by European authorities
last month, underlined that players must avoid using bonus
schemes to incentivise trading in contracts for difference and
other of the highly-leveraged products small traders use to make
bets on moves in currencies and other liquid assets.
CySEC chair Demetra Kalogerou said in an email to Reuters
that "since early 2015, CySEC has monitored CFD, binary options
and rolling spot forex providers very closely to ensure firms
are acting in the best interests of retail clients. In many
cases, they are not. This is not acceptable.
"Our aim here is to put a stop to the abuse of the honest,
fair and professional principle which must govern firms'
operations, and in most cases do."
Many retail traders have protested to the Cypriot
authorities over their treatment by the dozens of retail brokers
based on the island, and say the regulator has failed to act
against firms who have unfairly retained client funds.
Kalogerou also said that "firms offering complex or
speculative products must limit available leverage to 1:50 as
default and process same-day requests for client fund
(Reporting by Huw Jones and Patrick Graham, editing by Nigel